Ramaphosa has endorsed the Phase I report of the Eskom Restructuring Task Team (ERTT), setting the stage for changes aimed at increasing competition, attracting investment, reducing electricity prices and improving long-term energy security.
The report recommends the establishment of an independent Transmission System Operator (TSO), separate from Eskom, as part of broader reforms to the SA electricity market. “This report shows how government can ensure that the architecture of the electricity sector can change as the sector continues to evolve, creating the foundation for SA’s growth,” Ramaphosa said.
Ramaphosa said it is encouraging that key stakeholders are aligned on the need to reform the electricity sector.
The proposed TSO is expected to support the development of a competitive wholesale electricity market. Government says this would help deliver more reliable and cost-effective electricity, while supporting economic growth, investment and job creation.
The ERTT presented the Phase I report to Ramaphosa on July 30. The report found that Eskom restructuring is feasible, aligned with international best practice and can be implemented without undermining Eskom’s financial sustainability.
The report also warned that rising municipal arrear debt owed to Eskom must be addressed because of risks to Eskom and the wider electricity sector.
Phase II will now begin and run over the next three months. This phase will develop a detailed transaction structure and implementation plan for the proposed reforms.
The ERTT has proposed a working group to develop a consolidated action plan to contain municipal arrears. Proposed measures include stronger credit controls, smart meter rollouts, Distribution Agency Agreements and stricter licence enforcement.
The plan will also build on the Municipal Debt Relief Programme, Metro Trading Services Reform and the Electricity Distribution Industry Reform Roadmap.
Immediate actions include strengthening the independence of the National Transmission Company of SA (NTCSA) and ring-fencing NTCSA’s licensed activities internally.
Government will also begin steps to unbundle tariffs, clarify payment flows in the restructured market and develop mechanisms to protect market participants from non-payment.
To strengthen governance, Eskom board members will not serve on the NTCSA board. The appointment of the NTCSA Chief Executive Officer and senior management will be the sole responsibility of the NTCSA board.
Decision-making on market, financial and operational matters will be delegated from Eskom to NTCSA. Access decisions for the transmission network will also move to NTCSA and later to the TSO.
–ChannelAfrica–
